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Income Tax Appellate Tribunal, BANGALORE BENCH ‘ A ’
Before: SHRI N.V. VASUDEVAN & SHRI INTURI RAMA RAO
common order dt.16.11.2017 of Learned Commissioner of Income Tax (Appeals)-7, Bangalore for the Assessment Years 2010-11 to 2013-14 of the appellant.
Identical grounds have been raised by the appellant in all these appeals. The facts relevant for Assessment Year 2010-11 in are stated herein for the sake of convenience and clarity.
3. The appellant raised the following grounds of appeal :
Briefly the facts of the case are as under :
3.1 The assessee is an individual. The assessee filed return of income.
The returned income includes the income from house property. The appellant also offered to tax income earned by his minor son namely Master Vineet R Ellore from house property. The appellant also claimed credit in respect of the TDS deducted in the name of his minor son. The said return of income was processed under Section 143(1) of the Income Tax Act, 1961 (in short 'the Act') denying the credit in respect of the TDS deducted in the name of his minor son. Being aggrieved by the intimation of the Assessing Officer, the assessee filed appeal before the CIT (Appeals) who confirmed the action of the Assessing Officer in denying the credit for tax deducted at source in the name of minor son on the ground that the deductee had failed to submit declaration to the deductor in terms of proviso to Sub-Rule 2 of Rule 37BA of the I T Rules. appeal before us.
The learned Authorised Representative submitted that mere failure to furnish the declaration to the deductor does not take away a right of the appellant to claim credit for tax on income which had already assessed to tax. He submitted that the issue may be restored to the file of Assessing Officer to allow credit for TDS after due verification whether tax was deducted and remitted to central government account.
On the other hand, the learned Departmental Representative relied on the orders of the authorities below.
We have heard the rival contentions and carefully considered the material on record. The only issue in the present appeal is whether the appellant was entitled to credit for the TDS made in the name of the minor whose income was offered to tax in the hands of the appellant, even though the minor had failed to file the declaration to the deductor as contemplated in the proviso to sub-rule 2 of Rule 37BA of the IT Rules.
The provisions of Section 199 provides that the tax deduction made in terms of Chapter XVII of the Income Tax Act, 1961 and paid to the central from whose income deduction was made. The provisions of sub-section (3) of Section 199 empowers the CBDT to frame rules for the purpose of giving credit to the person other than the deductee. Accordingly, Rule 37BA was inserted w.e.f. 1.4.2009 which reads as under :-
“ [Credit for tax deducted at source for the purposes of section 199.
37BA. (1) Credit for tax deducted at source and paid to the Central Government in accordance with the provisions of Chapter XVII, shall be given to the person to whom payment has been made or credit has been given (hereinafter referred to as deductee) on the basis of information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorised by such authority. (2) (i) If the income on which tax has been deducted at source is assessable in the hands of a person other than the deductee, credit for tax deducted at source shall be given to the other person in cases where— (a) the income of the deductee is included in the total income of another person under the provisions of section 60, section 61, section 64, section 93 or section 94; (b) the income of a deductee being an association of persons or a trust is assessable in the hands of members of the association of persons, or in the hands of trustees, as the case may be; (c) the income from an asset held in the name of a deductee, being a partner of a firm or a karta of a Hindu undivided family, is assessable as the income of the firm, or Hindu undivided family, as the case may be; (d) the income from a property, deposit, security, unit or share held in the name of a deductee is owned jointly by the deductee and other persons and the income is assessable in their hands in the same proportion as their ownership of the asset :
Provided that the deductee files a declaration with the deductor and the deductor reports the tax deduction in the name of the other person in the information relating to deduction of tax referred to in sub-rule (1). (ii) The declaration filed by the deductee under clause (i) shall contain the name, address, permanent account number of the person to whom credit is to be given, payment or credit in relation to which credit is to be given and reasons for giving credit to such person. (iii) The deductor shall issue the certificate for deduction of tax at source in the name of the person in whose name credit is shown in the information relating to deduction of tax referred to in sub-rule (1) and shall keep the declaration in his safe custody.
(3) (i) Credit for tax deducted at source and paid to the Central Government, shall be given for the assessment year for which such income is assessable. (ii) Where tax has been deducted at source and paid to the Central Government and the income is assessable over a number of years, credit for tax deducted at source shall be allowed across those years in the same proportion in which the income is assessable to tax. (4) Credit for tax deducted at source and paid to the account of the Central Government shall be granted on the basis of— (i) the information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorised by such authority; and (ii) the information in the return of income in respect of the claim for the credit, subject to verification in accordance with the risk management strategy formulated by the Board from time to time.]”
We are now concerned with the credit in respect of income of the minor which is assessed in the hands of the appellant. From the mere perusal of the orders of the authorities below, it is apparent that the only reason for denying the credit for TDS is that the TDS was not reflected in the return filed electronically in Form 26AS. From the perusal of the Rule 37BA, it is clear that the credit for tax deduction at source and paid to the account of central government shall be granted on the basis of (i) information relating to the deduction of tax furnished by the deductor to the concerned authorities (ii) on the basis of the information in the return of income in respect of the claim for the credit subject to verification in accordance with the policy framed by the Board from time Form 26AS by the appellant cannot be a bar to allow the credit in respect of TDS in as much as the claim can be allowed based on the information contained in the return of income subject to such verification by the Assessing Officer as deem fit. Therefore in our considered opinion, the lower authorities were not justified in denying the credit for tax deducted at source in the name of minor on the ground that the same was not reflected in the Form 26AS by the appellant.
We are also fortified in taking this view by the Instruction No.5 of 2013 wherein the Board has given instructions to the officers on the issue of granting credit for TDS following the directions of Hon’ble Delhi High Court in the case of ‘Court on Its Own Motion Vs. UOI & Ors in WP (C)
2659/2012 & WP(C) 5443/2012’ - regarding “ 1…………. 2………… 3. In view of the order of the Hon'ble Delhi High Court (reference para 50 of the order), it has been decided by the Board that when an assessee approaches the Assessing Officer with requisite details and particulars in the form of TDS Certificate as an evidence against any mismatched amount, the said Assessing Officer will verify whether or not the deductor has made payment of the TDS in the Government Account and if the payment has been made, credit of the same should be given to the 8 153 to 155/Bang/2018 assessee. However, the Assessing Officer is at liberty to ascertain and verify the true and correct position about the TDS Certificate. Such verification may be made with the relevant AO(TDS). The AO(TDS) may also, if deemed necessary, issue a notice to the deductor to compel him to file correction statement as per the procedure laid down. In this regard, the AO(TDS) may invoke all the powers and authority as available to him / her as per the Income Tax Act. If required and necessary, he/she can obtain prior approval of the Director or Commissioner of Income Tax. The authorities can also examine whether general approval can be given. 4……..”
Accordingly, we remit this issue back to the file of the Assessing Officer for the purpose of verification whether or not the deductor had made the payment of TDS to the Govt. Account and if the payment has been made, credit of the same should be given to the assessee. The necessary verification may be made by the A.O. as he deems fit necessary.
In the result, the appeals filed by the assessee are partly allowed for statistical purposes. Order pronounced in the open court on the 18th day of May, 2018.